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What Trade Spat? Airfreight Is Booming Again, Despite Global Tensions

Trade group projects an 8.6% increase in airline cargo sales this year

The nose cone of a Boeing 747 cargo aircraft, operated by CargoLogicAir, was lifted during a demonstration showing the loading of a Jeep during preparations ahead of the Farnborough International Airshow.
Photo:
Simon Dawson/Bloomberg News

FARNBOROUGH, England—
Boeing Co.
has secured a $9.8 billion commitment for cargo planes, underscoring a recent boom in airfreight that so far hasn’t softened because of an escalating global showdown over trade.

Russia’s Volga-Dnepr Group and CargoLogicHolding said Tuesday they would buy 29 of Boeing’s 777 freighter jets. The two freight specialists, which have shared ownership, also used the Farnborough Airshow, held this week outside London, to reconfirm a $2 billion agreement for five Boeing 747-8 jumbo jet freighters. The deals followed a series of multibillion-dollar cargo-plane agreements announced earlier in the show.

“Air cargo is back, without question,” said Randy Tinseth, Boeing’s vice president for commercial plane marketing. The market has been recovering strongly from a prolonged slump in the wake of the global economic crisis.

The International Air Transport Association projects an 8.6% increase in airline cargo sales this year, to $59.2 billion. Business has recovered since 2009 when it fell to $48.4 billion sales following the financial crisis. Mr. Tinseth said the global fleet of cargo planes is expected to grow by 70% in the next 20 years.

Aerospace executives have gathered at Farnborough amid rising trade tensions between the U.S. and China, as well as among Washington and a number of the U.S.’s traditionally close trading allies, including the European Union, Mexico and Canada.

The Trump administration has imposed tariffs on goods from Chinese, European and other markets, arguing prior trade agreements disadvantaged the U.S. China and Europe, among others, have imposed retaliatory measures.

So far, though, there have been scant, specific signs the trade tensions are causing a significant slowdown in airfreight, a key indicator for the health of the general commercial aviation market. When airfreight volumes start to fall, passenger demand typically follows months later.

Calin Rovinescu, chief executive of Air Canada, one of the largest foreign airlines flying into the U.S., said on Monday that airfreight and passenger demand so far has held up. That view was echoed by Steven Udvar-Házy, the founder of plane rental giant
Air Lease Corp.
“We have seen no evidence from any of our customers of any reduction in traffic or cargo movements,” he said.

Airfreight shipments have been bolstered by numerous drivers, including the growth of online commerce. The sector is somewhat insulated from the current clash over trade. Early tariffs imposed by the U.S., and countered by China and EU, affect goods typically moved by sea—like steel and aluminum.

GE Capital Aviation Services, a unit of
General Electric Co.
, said Tuesday it had agreed to buy 35 737-800 Boeing jets converted for cargo use. Deals for jets that are converted from passenger airlines typically don’t come with specific price tags.

And on Monday, Boeing announced a deal with DHL Worldwide Express Inc. for 14 777 freighters. The German freight operator also took options for nine more of the planes. Qatar Airways on Monday completed a $1.7 billion deal for five 777 freighters with Boeing.